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Hi Mike
“When the non-controlling interest is valued on a proportional basis, how is the share of any impairment in the value of goodwill allocated?”
Answer:
When the non-controlling interest is valued on a proportional basis, any impairment of goodwill is allocated entirely to the parent entity
Why is the above?
I was thinking that when doing consolidation exercises I have always attributed the share of GW impairment to the NCI…
The key is the use of the word “proportional”
Where nci is valued on a proportional basis their investment is taken to be their percentage share as applied to the fair value of the subsidiary’s identifiable net assets …
… and goodwill is not an identifiable asset
So in the workings to establish the value of the nci investment, no amount for goodwill is attributable to them
Therefore all goodwill is ours
And therefore 100% of any impairment of goodwill is attributed to teh parent
Watch the lectures (they’re free) on this site
OK?
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